Commercial Court emphasises the importance of the prohibition on the collateral use of disclosed documents

CPR 31.22 provides that disclosed documents may be used only for the purpose of the proceedings in which they were disclosed without the consent of the disclosing party or the Court’s permission.  It is well established that this rule, known as the collateral use prohibition, applies both to the disclosed documents themselves and to information derived from the documents. 

In The ECU Group PLC v HSBC Bank PLC [2018] EWHC 3045, a decision handed down on 9 November 2018, Andrew Baker J considered whether to grant retrospective permission for a party to use disclosed documents in breach of CPR 31.22.  

The applicant, ECU, obtained pre-action disclosure from HSBC in relation to what it said was a potential claim in England regarding currency trading.  It then used information in the disclosed documents to instruct lawyers in the US to advise on potential proceedings there, and also provided a copy of a witness statement containing allegations based on the disclosed documents to a journalist.  The journalist then wrote an article making reference to the witness statement and, thereby, publishing the contents of the disclosed documents.

These acts were not for the purpose of the proceedings in which the pre-action disclosure was given, were not undertaken with HSBC’s consent or the Court’s permission, and were therefore in breach of CPR 31.22.  ECU therefore applied for retrospective permission for those uses. 

The Court emphasised that retrospective permission for a breach of CPR 31.22 will only rarely be given.  Accordingly, the Court refused retrospective permission for ECU to provide the witness statement to the journalist, describing that breach as a serious one which was "neither sensibly explicable or remotely excusable”.  The Court also expressed concern that the witness statement had been provided to the journalist because ECU’s solicitor, on his own account, had not realised that the collateral use prohibition applied to information derived from disclosed documents as well as to the documents themselves: see paras 24 to 26 and 43 of the Judgment.

Further, while the Court granted retrospective permission to use the disclosed documents to obtain the advice from US lawyers, it imposed stringent conditions on the grant of that permission.   These included a requirement that ECU’s solicitor swear an affidavit confirming the extent to which the disclosed documents were used to obtain that advice.      

Three key lessons arise from this judgment, which are of importance for all commercial litigators.  

·         First, the collateral use prohibition is an important rule which the Court will enforce rigorously.  Practitioners must be well versed in both the existence and scope of the rule, and retrospective permission to use documents in breach of it will only rarely be given. 

·         Second, the Court will be particularly astute to guard against parties using its disclosure processes to facilitate the litigation of the cases through the press in breach of the collateral use prohibition.

·         Third, parties who obtain pre-action disclosure in this jurisdiction will not, absent special circumstances, be permitted to use that disclosure to commence foreign proceedings.  Pre-action disclosure is ancillary to anticipated English proceedings and the Court will examine closely any request by a claimant to use the disclosure in support of proceedings elsewhere.            

Sonia Tolaney QC and Sandy Phipps acted for HSBC.  A copy of the judgment is available here.